Top Tips From Timeless Tomes

 | Jul 06, 2012 | 3:30 PM EDT  | Comments
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Stock quotes in this article:

jcp

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pcr

The second half of the year for investors effectively starts next week as Alcoa's (AA) earnings report unofficially kicks off earnings season on Monday. As a whole, it's been a benign first half for US markets; a strong first quarter with a weak second quarter has left the US markets slightly up, not a minor accomplishment considering what is happening in Europe.

For those looking to get a sense of direction or simply wanting to recharge the mind, I would suggest some excellent reading from a few books to get your mind back on the right track. For now put aside the day to day data that influences daily trading activity and inside arm your mind with some timeless investment literature that can guide you for years.

Let's start with the recently published Alpha Masters: Unlocking the Secrets of the World's Top Hedge Funds, which is an excellent look into some of best money managers in the hedge fund business today. Author Maneet Ahuja devotes a chapter to each person and names include David Tepper, Bill Ackman, Ray Dialo, and short seller Jim Chanos. The level of detail is surprisingly good as this book goes beyond the biographical information. Instead you get conversations with Bil Ackman about his hits and misses and why he's bullish on J.C. Penney (JCP) and Canadian Pacific Railway (CPR) today. Chanos discusses his bearish views on China, while Tepper outlines his grand slam financial bet in 2009 and where he is looking today.

The Most Important Thing by Howard Marks may be one of the most important books to come out in years. I put that book in the same category as Margin of Safety by Seth Klarman. Always very private, Marks confined his market commentary to his highly regarded memos to clients. So what made him write a book? According to Marks, it was a letter from Warren Buffett asking him to please a write a book.

Of course, I have to humbly suggest that you also check out The Business of Value Investing by yours truly. This is a basic primer on investing, but even after 10 years in the profession, I have found invaluable to go back and read the basic building blocks of successful investing principles. My research focused on looking at dozens of successful investors spanning the last century -- Ben Graham, John Templeton, Warren Buffett, Seth Klarman, and others -- and conceptualizing their invest process into six basic elements: a sound investment philosophy, a good search strategy, valuation and management assessment, discipline, patience, and the ability to bet big during periods of maximum pessimism. As a thank you to Real Money subscribers, if you send me an email (sham@gadfunds.com), I will gladly send you a chapter or two to read -- after which I'm certain you will want the whole book.

Investing is a never-ending process of learning. In addition to reading necessary day-to-day information provided by Real Money and other outlets, it's always a good idea to take the time to absorb the timeless lessons from the excellent array of financial books available.

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